ZF slams possible US tariffs as “provocative”

“Trade barriers are not at all good for our business - no question" - ZF CEO Wolf-Henning Scheider

“Trade barriers are not at all good for our business – no question" – ZF CEO Wolf-Henning Scheider

ZF is calling threats by the US to impose tariffs on vehicles imported from the European Union (EU) "a provocation," as commercial tensions between the two blocks ratchet up.

The mooted 20% tariff imposition has stoked fears of ever-increasing retaliatory action on both sides of the Atlantic and as relations between the White House and the G7 nations have become decidedly frosty.

"Trade barriers are not at all good for our business, no question," said ZF CEO, Wolf-Henning Scheider at a technology briefing this week in the supplier's headquarters in the Southern German town of Friedrichshafen. "We have a very strong US business it is true, but the delivery network is complex.

"For example, we produce transmissions in South Carolina which we ship to a European customer and we have similar transmissions coming out of European plants going in the other direction. Trade barriers would affect us significantly. We hope the discussion partners come up with viable solutions.

"It is a provocation right now but let's come to a solution otherwise there will not be a winner."

President Trump has floated the idea of a 20% tariff on cars imported from the EU in retaliation for the Brussels club's own punitive measures against American goods, themselves a response to initial US moves.

The Trump administration has initiated a US trade department investigation into vehicle imports which could result in tariffs being added on cars on 'national security' grounds – also the justification used for import tariffs on aluminium and steel from a range of countries, including the EU.

Trump has made remarks before drawing attention to the imbalance on automotive trade between the US and Germany. German companies point to their sizeable manufacturing investments in the US and BMW has repeatedly pointed out that it is the largest vehicle exporter – by value – from the US.

The ZF chief also addressed fears the growing momentum to electric propulsion could lead to widespread job losses across the industry. Already, French businesses producing injectors and automatic transmissions are feeling the heat as electric vehicles start to assume more prominence, leading to a joint statement by Mayors condemning "non-stop diesel bashing."

In theory, there are 15,000 people affected in ZF plants [by any moves to electrification]," added Scheider. "ZF is obviously linked to internal combustion engines, but with integration of e-mobility into these modules, it gives us an excellent long-term approach with a vehicle with the best of both.

"We will prepare for that situation and we will discuss this with our Works Council. I don't have any answers today but I am confident because we have time, we will find solutions."

Scheider also noted ZF had "no interest" in producing batteries as the supplier did not want to be a competitor to its customers.

This week's news long-serving industry veteran, Peter Lake was leaving ZF also marks perhaps the end of the transition phase following the German supplier's acquisition of TRW and Scheider conceded there needed to be certain "digestion" phase before mulling any further moves in the market.

"We have [made] huge moves in the past with the TRW purchase – obviously we can still build on this," he noted before adding the rider: "Don't expect any big move soon.

"Our net debt position is decreasing heavily and this gives us a a lot of strength to go even for a next move. Too many opportunities in the market are overstated right now. We have the potential, but we also need a certain digestion phase."

In Friedrichshafen this week, ZF was outlining its array of intelligent mechanical and sensor systems as well as control units to fit in with its 'See, Think, Act' concept. These were demonstrated on its Innovation Truck and Terminal Yard Tractor which can manoeuvrer independently, while autonomous driving functions facilitate parcel carriers' daily work.

Cloud-based algorithms calculate the ideal route in real time, while electric drive solutions work with autonomous driving functions and smart network concepts. This enables the company to closely oversee all central areas of logistics, from depots to parcel delivery services.
Using ZF's solutions in the future, vehicles could independently manoeuvrer swap bodies or trailers to their respective destinations, whether they are depots of freight, air or sea.

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